Pat Buchanan’s new book (Where the Right Went Wrong, NY: St. Martin’s, 2004) landed on my desk, and flipping past the fine attacks on the Iraq War and the not-so-fine praise of Hamiltonian autarky, I bumped into this plan for dealing with China, which is presented as the most pressing threat to America.
We must manage trade with Beijing and make it reciprocal. If America is to buy 30 percent of China’s exports, Beijing must give preference in its purchases to goods made in the USA.... Should China refuse, we should shift U.S. purchases to Free Asia by imposing a tariff on goods made in China. Should Beijing impose a reciprocal tariff, fine. As we buy forty times as great a share of China’s GDP as she buys of ours, there is not doubt who loses that trade war.” (p. 151)
No doubt indeed: everyone but government and inefficient producer cartels. Yes, I know that Pat’s kind of talk makes anyone with a bit of economic understanding stammer in disbelief, starting with all this talk about us and them, as if trade is conducted in the manner of warfare: shots fired one way and then the other. Is he somehow unaware that the overwhelming amount of trade between the two countries is driven not by governments but by entrepreneurs and consumers within the framework of markets? But most striking of all is the underlying assumption that the only beneficiaries from trade are sellers. Thus does he believe that only China looses if “we” impose tariffs. Must we point out that this the perspective leaves out the critical element of the consumers, meaning, well, just about everyone?
Somehow it always comes back to the foundational insight that trade--all trade everywhere of whatever type, regardless of political borders or anything else--is mutually beneficial. If that one insight could be understood and absorbed and fully applied by all people who comment on politics and economics, how much fallacy would the world be spared? At least we would be rid of the idea that somehow making Americans pay vastly more for imported goods only hurts China.
